Didi Plunges Below IPO Price as China Expands Listings Crackdown

Didi Global Inc. plunged Tuesday in U.S. trading as the ride-hailing company faced scrutiny over its data security and a broader Chinese crackdown on companies listing their shares abroad…

China’s State Council issued a sweeping warning to China’s biggest companies, vowing to tighten oversight of data security and overseas listings. That announcement followed the opening of a security review by China’s internet regulator last week and a demand for app stores to remove Didi.

Didi’s American depositary shares fell as much as 25% to $11.58, wiping out about $22 billion of market value and taking the stock below the $14 price from its initial public offering. Beijing-based Didi controls almost the entire ride-hailing market in China and raised $4.4 billion last week in the second-largest U.S. IPO for a Chinese firm.

The State Council’s broadside marked an escalation in President Xi Jinping’s campaign to bring the nation’s technology firms — and their reams of valuable data — under control. Over the weekend, China also moved against two other companies that also recently listed in New York, — Full Truck Alliance Co. and Kanzhun Ltd., Ltd.

The warning “is aimed at securities violations, but it also makes special provisions for cross-border data supervision, which signals that data supervision has become one of the most important regulatory fields in China,” said Xia Hailong, a lawyer at the Shanghai-based Shenlun law firm.

“Since there is no mechanism in place for cross-border supervision of securities, conducting a security review on data could serve as an effective tool for Chinese regulators to rein in overseas listed companies,” he said.

The Didi probe stunned investors and industry executives, hammering the Hong Kong shares of peers from Tencent Holdings Ltd. — one of Didi’s largest backers — to Alibaba Group Holding Ltd. and Meituan. Investors worry that…

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